Coinbase urges Supreme Court to block IRS crypto data grab to preserve constitutional privacy

Coinbase has filed an amicus brief with the US Supreme Court supporting a constitutional challenge to the Internal Revenue Service’s (IRS) broad collection of cryptocurrency user data, arguing it violates Fourth Amendment protections.

The filingsubmitted on April 30, outlines the company’s opposition to an IRS John Doe summons that compelled the disclosure of detailed financial and identity records for more than 14,000 customers without individualized suspicion.

The brief supported petitioner James Harper, whose financial data was obtained by the IRS after issuing a sweeping 2016 summons to Coinbase seeking information on approximately 500,000 users.

Coinbase resisted the request, citing user privacy protections, but ultimately complied after a federal court ordered it to produce data on a smaller subset of users linked to 8.9 million transactions over a three-year period.

The summons enabled the IRS to connect pseudonymous blockchain wallet addresses to real-world identities, a move Coinbase argues permits unchecked, indefinite surveillance of users’ crypto transactions.

Coinbase chief legal officer Paul Grewal commented on the filing in a post on X:

“The third-party doctrine says that any time you voluntarily share info with a third party you have no reasonable expectation of privacy whatsoever. Today, Coinbase filed an amicus brief with the US Supreme Court to right this wrong.”

He added that the doctrine’s overreach can be painful and emphasized that while Coinbase supports tax compliance, the IRS request goes far beyond a narrow and tailored request and beyond crypto.

The third-party doctrine is a core principle in US law. It considers that individuals forfeit their reasonable expectation of privacy when they voluntarily disclose information to third parties, such as banks, phone companies, or internet service providers.

Grewal further said:

“This applies to banks, phone companies, ISPs, email, you name it. As we explain here, you should have the same right to privacy for your inbox or account as you have for a letter in your mailbox.”

Coinbase challenges IRS surveillance reach

In a December reportthe crypto firm revealed that it received 10,707 requests from law enforcement and federal agencies in 2024, most of which came from the US.

Coinbase stated in the same report that its goal is to narrow overly broad or vague requests and provide data that the IRS cannot use to individualize customer details.

In the filing, the firm reiterates that it cooperates with lawful government requests but draws the line at bulk data collection without cause.

The brief recounts the company’s legal attempts to block the summons, its refusal to comply voluntarily, and the arguments made during enforcement proceedings.

According to the filing, Coinbase described the IRS’s action as an overreach that could let the agency “target anybody” and “rummage through” user data.

The brief notes that despite narrowing the original summons, it still resulted in the IRS acquiring information such as names, taxpayer identification numbers, transaction logs, and data from counterparties.

The company complied only after being compelled by a court order under threat of contempt.

Blockchain privacy at risk

According to the brief, the IRS’ ability to link a person’s identity to blockchain wallet addresses undermines the privacy model of pseudonymized crypto transactions.

Once the agency establishes this link, it can trace historical and future transactions with minimal effort. Coinbase argued that law enforcement can use this data to build a continuous, real-time profile of users’ blockchain activity, even beyond transactions conducted on the exchange.

The brief further stated that the First Circuit misapplied the third-party doctrine by failing to account for differences in scale, intrusiveness, and duration of the IRS’s actions compared to historical precedent.

Coinbase calls on the Supreme Court to reinforce limitations outlined in Carpenter v. United States, which restricted warrantless access to cell phone location data and emphasized the need for updated interpretations of Fourth Amendment protections in the digital era.

The company warns that if the decision is left unchecked, it will establish a precedent allowing government agencies to access vast troves of user data from digital platforms without warrants or particularized suspicion.

Coinbase concludes by urging the Supreme Court to grant certiorari and clarify that bulk acquisition of sensitive personal and financial data from crypto service providers must comply with constitutional standards.

Mentioned in this article